by Alan Thorpe
International Editor

Mostly, ships will drydock on routes upon which they trade. Deviation is uncommon nowadays. [Though, when it comes to conversion, things change, with shipowners looking for the very cheapest area in which to convert their ships].

Two beneficiaries of the general reluctance to deviate are the two large Middle East ship repair yards in Dubai (Dubai Drydocks) and Bahrain (ASRY). These two yards now control virtually all the “westbound” tanker trade out of the Arabian Gulf, the “eastbound” trade still using the yards in the Singapore area.


Drydocking costs are among the most expensive elements of any ship’s lifetime operational costs. Not surprisingly, then, owners/managers are always looking for the best deals within the general repair market within their favored areas. The basic repair cost, especially its labor and steel components, remains the most important factor when negotiating a repair operation, although for some niche markets, such as cruise vessel, delivery times also play a major role.

Fortunately for the owner/manager, the ship repair industry remains in a situation of over capacity, albeit much less now compared with recent years. This will always result in there being a fairly significant difference between repair quotes, sometimes as much as 50%, dependent upon workloads in the various yards.

Within every ship repair area there are “cheaper” areas: In northern Europe these areas include Poland, the Baltic States (Estonia, Lithuania and Latvia), and Russia. In the Mediterranean/Southern European area there are Turkey and the Balkan States. And in the Far East there is mainland China —currently and without doubt, the cheapest area in which to repair worldwide.)

Singapore 100
S. Korea 105/110
China 50/65
Indonesia 60/75
Japan 250
Middle East 100/105
S. Africa 110/115
Mediterrannean 125/130
Balkans/Turkey 110/115
N. Europe 140/150
Scandinavia 150/160
Baltic/Russia 110/115
USA 170/180

The quality of both the repair itself and the steel which is utilized are becoming more important to many of the more traditional shipowners. Many such owners are now looking more seriously at the quality issue, especially if it means spending a little bit more than would be required in a “cheaper” yard.

The scenario of “cheaper” yards applies mainly to the general repair market. The extensive engineering and design requirements for the conversion industry restrict the “cheaper” yards from entering this market. There are, however, always exceptions to the rule as can clearly be seen in Poland where Remontowa, Gdansk, has become one of the major players in the European conversion market, with recent examples being the conversion of a tanker to a specialized North Sea shuttle tanker, the refurbishment of a number of large passenger/car ferries, and the rebuilding of a semi-submersible drilling rig.

Traditional ship repair areas are now looking at the price levels being offered by the low end competitors in their regions and then trying to compete by means of productivity improvements and by utilizing “cheaper” labor.

For the past two decades, the Singapore area has retained its place as the world’s leading ship repair centre. However, cheaper repair prices from mainland China have led to a many general repair contracts being placed in Chinese yards instead of the Singapore area.
The price difference is marked. Steel prices in mainland China are currently well below US$1.00/kg compared with over $2.00 in Singapore, and this Singapore price level is less than a year ago when it was nearer $2.50.
The internationally better known Chinese yards are nearer the $1.00/kg mark, but the smaller yards, striving to win international business, are down as far as 65 cents. However, the quality of the steel they use must be brought into question.
Meantime, Singapore yards have been doing well in the conversion arena. Singapore yards already have three FPSO conversion contracts for 2001 and another one or two are expected. Promet also has two large offshore construction contracts and many of the yards are looking forward to gaining contracts from the offshore sector The FPSO’s alone will take some 4,000 workers out of the straight repair market and consequently repair yards may face some labor problems.. Last year saw a slight reduction in overall workforce numbers and, with a busy time coming in general repair, conversion and offshore construction, finding sufficient workers may prove to be a headache for the various yards.
The loss of general repair work has forced Singapore into a rethink on its whole future, with the main result being that the original four large shipyards are now down to two, Keppel merging with Hitachi Zosen and Sembawang merging with Jurong Shipyard.
There have been rumors that further mergers will take place during next year resulting in there being only one ship repair company controlling all the large yards. This, of course is being denied by the major players in Singapore’s repair industry, but how feasible is such a move - and could it happen?
First, the Singapore government has a significant stake in all the major yards and therefore the cynical among us would say that the one company already exists.
Meantime, Sembawang and Jurong Shipyard (JSL) are saying that they only cooperate on technical, safety and procurement matters and that marketing is done autonomously. Both these yards, though, take advantage of the cheaper steel price levels offered by Sembawang’s Indonesian subsidiary Karimun Sembawang Shipyard (KSS).
The merger between Keppel and Hitachi has resulted in Keppel personnel taking over the marketing activities of both yards, which are now offered as a single unit.
With mainland China gradually increasing its international penetration, and the two yards in the Middle East capturing the majority of west bound traffic, the Singapore yards are feeling the pinch, especially in the general repair market. The price levels offered by the Chinese yards are that much lower than Singapore (more than 50%), it is not even worth Singapore quoting for steel renewal work when a Chinese yard is on the quotation list.
During the mid-nineties, massive investment in Singapore resulted in both Keppel and JSL building new ULCC graving docks. There is now a total of eight graving docks capable of handling VLCC/ULCC tonnage in the island—and with the market as it stands—maybe this is an overcapacity situation.
Should a reduction in capacity ever take place, the obvious choice would be Sembawang, which is in a prime development area and away from the Jurong Industrial area, where the other large yards are located. The floating docks, at Sembawang, could be transferred to KSS and all the large tankers could be drydocked at JSL, where there are three graving docks of the necessary capacity.
However, Sembawang has one of the longest histories of repair activities in Singapore and it would have to take a sustained period of poor market conditions for such a decision to be made.
So, what of the future? Will there be a coming together of Sembawang, Keppel and JSL? If so, will there be a reduction of capacity? There are a few indicators that something may happen during the coming 12 months. One of these is the fact that Keppel’s U.K. agent, World Shipping Services, has recently closed and Keppel, which used to operate its own office in London, has decided to deal with the U.K. market direct from Singapore.
This could just indicate that a merger might take place and that the “Singapore Inc.” agent in London for future years would be Sembawang’s current agency, Wilmot Marine Services, which recently negotiated the evergreen deals with Shell and BP.
Keppel appears keen on pushing such a merger. Sembawang and JSL do not, insisting that there is enough market there for all.

One beneficiary of any merger would be nearby Malaysia Shipyard & Engineering (MSE), located across the Jahore causeway at Pasir Gudang. Always considered by shipowners and managers as part of the Singapore scene, the idea that there would only be one competitive Singaporean company and a possible reduction in capacity, would obviously delight the very affable W. C. Looi (head of MSE’s marketing team).
Whatever happens next year Singapore, with a great and long history in the ship repair and conversion industry, will be around in some form for many years and will inevitably remain one of the market leaders.

There are currently two FPSO conversion projects underway at Jurong Shipyard Ltd (JSL), the first involving the 270,139 dwt VLCC Berge Hus, which is the second tanker converted by JSL for Norway’s Bergesen Offshore. It arrived in JSL during January and will be completed by June this year. The second tanker is the 273,175 dwt VLCC Stena Continent, which has been purchased by Kellogg Brown & Root and will be converted for use by Petrobras) for work off the Brazilian coast. This project is likely to take some 18 months to complete, the vessel only recently arriving at JSL.
Other large scale projects currently underway in JSL include the conversion of an offshore barge to a 148 MW power plant station for Wärtsila, and the refurbishment of the jack-up rig Ocean Sovereign, which has been sold by Diamond Offshore and will be renamed Trident 9 by its new owners Reading & Bates/Transocean/Sedco Forex.
On the general repair side, Tanker Pacific’s 89,922 dwt Panamanian-registered Natuna Sea is currently undergoing some 1,000 tonnes of steel renewal following extensive grounding damage off the Indonesian coast. It suffered damage to four of its tanks.
The redelivery of the large 50,746 dwt LNG carrier Hoegh Galleon from Sembawang Shipyard has finally taken place. The vessel was originally laid-up by Mitsui OSK Lines (MOL) in the Johore River during 1998 following extensive cracking being discovered in the cargo tank system. The vessel, then named the Mystic Lady, was transferred during August 1999 to Karimun Sembawang Shipyard (KSS), a joint venture between Singapore’s Sembawang Shipyard and the Indonesian Government, for intensive inspection and survey to see if it was fit to be repaired or to be sent to the scrap yard.
The new owner, Norway’s Leif Hoegh, which also operates the sister vessel, Norman Lady, decided on a repair operation, which resulted in KSS carrying out extensive ballast tank blasting and coating (Jotun) and a total of 120 km of welding to the cargo containment system, which is constructed of 9% nickel steel. The vessel was then transferred to Sembawang Shipyard during September 2000 for drydocking operations and a number of owner’s repairs.
Following gas trials and cargo tank cooling down operations in Indonesia, it will enter a 17 year charter with U.S. gas utility Enron for service between Venezuela and the U.S. east coast. The vessel was built during 1974 by Norway’s Moss Rosenberg shipyard, Stavanger and was only the second vessel ever to utilize the Moss Rosenberg spherical tank containment system.
Apart from completing the Hoegh Galleon last month, Singapore’s Sembawang Shipyard also had two other large conversion/repair projects underway. The first is the conversion from VLCC to FPSO of the 311,896 dwt former Shell-owned Lanistes. It arrived in the yard last August and is expected to be delivered to new owners, Shell Exploration BV, this April this year. It will then be based in the Northern Iran end of the Persian Gulf for use on the Nowrooz and Soroosh Fields.

The second large repair project underway at Sembawang at the time of writing is the bedplate renewal to the Wärtsilä NSD slow-speed diesel engine onboard the 299,089 dwt VLCC Venus Glory, which is owned by Greece’s Gulf Marine and technically managed by Glasgow’s Northern Marine. This is the first several VLCC’s built by Daewoo Heavy Industries’ that will require this operation. Gulf Marine has also booking the Mars Glory (299,089 dwt), Neptune Glory (299,127 dwt) and Saturn Glory (272,700 dwt) into Sembawang. Shell has also booked the 298,306 dwt Myrina into the yard, this likely to be the first of a number of M-class VLCCs due for the same operation.
Keppel Hitachi Zosen is currently experiencing a period with a number of large scale conversion/repair projects underway. The Tuas yard has recently completed the conversion of Oceanbulk’s 24,362 dwt Bahamas-registered containership Maysora into a specialized livestock carrier, for service between Australia and the Middle East. The vessel left the yard during the early part of February after being there for some six months.
The latest conversion project won by Keppel will see the 155,702 dwt Liberian tanker White Sea converted to a FPSO for Nortrans, which will charter the vessel, when completed, to Ranger Oil for use off Ivory Coast. The vessel is currently undergoing tank cleaning and initial preparatory work in Keppel’s Subic Bay shipyard in the Philippines prior arrival in Singapore.
Meanwhile, Boskalis’ trailing suction hopper dredge Seaway has been lengthened in the Tuas Shipyard and is now undergoing modernization work and further conversion work to increase its operating depth. The lengthening was by the insertion of a 30 m mid-body section, using some 1,000 tonnes of steel.

During last year (2000), Singapore’s ST Marine carried out repairs to 160 vessels worth some Sing$ 62 million. The target for this year is S$ 70 million. The yard has been particularly successful in the dredge market gaining 54% of the dredge work placed in Singapore, including the lengthening of HAM Dredging & Marine Contractors’ HAM 310.
ST Marine has recently won a contract from Anglo Eastern to carry out “winterization” operations onboard Canada Maritime’s 40,009 dwt Bermudan-registered containership Alligator Reliance, which is due in the yard in March and will be there for approximately 28 days. Another large contract due this month involves the Anawan, which is owned by B&H Singapore. It is a chemical tanker and will undergo the renewal of all the stainless steel heating coils in the 15 cargo tanks and the blasting and coating of some 12,000 m2 in the ballast tanks.